Companies listed on the Nigerian Stock Exchange have released first quarter ended, March 31, 2016 results that marked severe operating Environment.
Comparing the firm’s results under the period review to the 2015 period it shows that combined profit for 44 firms were down by 11.1 per cent to N252.3 billion, from N283.9 billion in 2015.
Similarly tax expense for the firms fell by 12.97 per cent for the first quarter of 2016 period to N35 billion from N40.2 billion reported in prior first quarter.
Analysts said the decline in tax expenses impact negatively on federal government aim at achieving its goal of boosting non-oil revenues especially taxes this year.
Digging deeper into the results shows that the major banks and Dangote Cement were the companies that reported any significant profit and increased tax expenses.
Dangote Cement reported a profit before taxes (PBT) of N54.53 billion was the biggest in the first quarter, followed by Zenith Bank’s N32.1 billion, Guaranty Trust Bank with N30.67 billion, Access bank’s N22.5 billion and FBN Holdings N22.05 billion to round off the top five.
The poor state of the economy showed up in the construction and cement industry as Lafarge Africa reported a quarterly loss, while Julius Berger, Dangote Cement and CCCN all reported lower profits for first quarter, 2016 than in the earlier period.
Capital market analysts attributed the weak earnings to uncertainty around Federal Government economic policies, delayed 2016 budget that was eventually signed last week, adverse external environment.
They added further that security challenges in some parts of the country affecting production and distribution of agriculture produce, low electricity supply, fuel shortages, and the foreign exchange crisis were major factors that eroded listed companies’ earnings.
The managing director, APT Securities and Funds Limited, Mr. Garba Kurfi attributed the current lull in the economy to insurgency in the North East, the fall in global oil price, declining naira exchange rate, among others.
He also said that the inability of federal government to give clear policy direction in the last nine months contributed to the companies lower profits. He however said with the signing of the 2016 budget, this will give a new direction to the capital market and the economy at large.